Millions of taxpayers awaiting refund from IRS could face 'extreme delays'
Delays in tax refunds most likely to hurt low-income Americans, report finds
Millions of American taxpayers are waiting for the Internal Revenue Service to process their federal income tax returns — and could face "extreme delays" in getting their refund, according to a recent report.
In a report to Congress, the National Taxpayer Advocate said the IRS had a backlog of 4.7 million returns for the 2019 tax year as of mid-May because the agency had temporarily suspended processing paper returns.
"Taxpayers who filed a 2019 paper return and are entitled to refunds may be in for a long wait," the report, authored by Erin Collins, said.
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Earlier this year, the federal government extended the deadline for filing taxes from April 15 to July 15, giving Americans three months longer than they typically would have to file their taxes as a result of the coronavirus pandemic, which dragged the nation's economy into the worst downturn since the Great Depression.
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But taxpayers who filed before the April deadline in hopes of receiving a refund have experienced some adverse side-effects, according to the report, including lengthy delays in receiving their money. Delays in refunds tend to disproportionately hurt low-income taxpayers who rely on the money as part of their annual household income, Collins wrote.
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More than 20 million notices that were prepared between April 8 and May 31, at the height of the shutdown, are just being mailed out now.
Taxpayers also had access to fewer resources because the agency shut down many of its telephone lines and its centers. The report noted that the "only resources readily available were IRS.gov and automated telephone lines."
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"While the overwhelming majority of taxpayers file electronically, taxpayers who file paper returns are experiencing extreme delays in processing their returns," the report said, adding: "Many taxpayers are facing financial hardship associated with the COVID-19 crisis and need the IRS to process their paper-filed returns as soon as possible and release their refund."
The delays may also affect a taxpayer's stimulus check, Collins wrote, saying that it "caused confusion for many taxpayers."
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The IRS is relying on Americans' 2018 or 2019 tax returns to calculate eligibility. Under the $2.2 trillion CARES Act signed at the end of March, individuals earning less than $75,000 will receive a one-time payment of $1,200. The payments are tapered for higher earners and phased out completely for those earning more than $99,000.